This invention relates generally to interactive processes carried out on an electronic network and is particularly directed to a real-time, interactive auction process particularly adapted for use in electronic commerce such as carried out on a global information network.
An auction is a public sale of property to the highest bidder where the price is determined by the last of a series of successive increasing bids. The auction may be silent or oral and may include many bidders, or may be limited to just one bidder. When only one bidder is involved, the bidder""s offer is either accepted or rejected. In the case of a rejection, the auctioneer typically proposes a counter offer.
The auction method of selling products, where the price is not fixed by the seller, is increasingly being used in electronic commerce (e-commerce) such as on a global information network. Offers, bids, counter offers and rejections are transmitted on the network. Bids are generated at the buyer""s end, or terminal, while offers, counter offers and rejections are generated at a central location where the auction administrator is located. Most current on-line auction systems involve many bidders submitting bids against one another over a specified time period for a given item. Other approaches require human control and inputs at the site of the administrator for accepting or rejecting bids. The human element in administering the auction increases the.cost of the auction, introduces the possibility of human error, and prolongs the time required in the acceptance or rejection of bids.
The present invention addresses the aforementioned limitations of the prior art by providing an individualized, computerized, real-time flea market bidding engine for conducting auctions on a global information network such as the Internet. Decisions regarding bid acceptance/rejection are made by a programmed central controller and a counter offer or rejection is transmitted to the bidder via the network with minimal delay.
Accordingly, it is an object of the present invention to provide an interactive auction process for use over an electronic medium such as a global information network involving the submission of one or more bids, by a perspective buyer and an acceptance or counter offer in. response by the seller.
It is another object of the present invention to provide an interactive auction process for use in electronic commerce in which a potential purchaser may make as many as three bids on an. item for sale and is locked out of the bidding process if the third and final bid is not accepted.
Yet another object of the present invention is to provide a computerized auction process for use on an interactive electronic network where a minimum acceptable price for an item being auctioned off which is greater than the cost of the item is randomly changed at the start of each bidding procedure making it impossible for the bidder to ascertain the minimum acceptable price.
A further object of the present invention is to provide an individualized auction procedure for accommodating a.single bidder where the bidder can enter as many as three offers which are either accepted or rejected in accordance with pre-established price limits.
This invention contemplates.an auction method for use in e-commerce where an administrator of the auction is connected to a bidder by means of a global information network, the method comprising the steps of assigning a minimum acceptable price (MAP) to a product based upon the cost of the product and a manufacturer""s suggested retail price (MSRP) for the product, where MSRP greater than MAP; calculating a virtual minimum acceptable price (VMAP) for the product, where VMAP is a randomly calculated percent greater than MAP for the product, and wherein VMAP is calculated by assigning a tight, medium or loose bidding range for the product, with VMAP having a tight bidding range assigned a value X% greater than MAP, VMAP having a medium bidding range assigned a value Y% greater than MAP, and VMAP having a loose bidding range assigned a value Z% greater than MAP, where X greater than Y greater than Z; receiving an offer for a product from a bidder via the global information network; comparing the offer with VMAP and MSRP; determining the number of offers by the bidder for said product within a predetermined time period; declining the offer and preventing the bidder from bidding on the product for the predetermined time period if the offer is the bidder""s third offer for the product within the predetermined time period and is less than VMAP; accepting the offer if the offer is equal to or less than MSRP or assigning MSRP as the agreed upon price if the offer is greater than MSRP; or calculating and providing a counter offer to the bidder if the offer is the bidder""s first or second offer within the predetermined time period and is less than VMAP, wherein the counter offer is between VMAP and MSRP.